PM Daily Market Commentary - 11/11/2014

By davefairtex on Tue, Nov 11, 2014 - 11:11pm

Gold rose +11.60 to 1163.00 on moderately heavy volume; silver rose +0.09 to 15.68 on moderate volume.  Gold rallied strongly reaching its EMA-9 at one point, only to trail off into the close.  Silver did less well, resulting in the gold/silver ratio rising +0.32 to 74.14.

The USD rallied for the first part of the day, touching 88.16 at one point; it then faded, ending up closing down -0.29 to 87.61 resulting in a failed rally on the day.  The failed rally in the buck reinforces the sense that the dollar may have peaked four days ago, which if true will help commodities, PM and most especially gold mining shares.

Mining shares did well today; GDX rose +4.41% on heavy volume, and GDXJ went up +6.41% on very heavy volume.  Both mining ETFs closed above their EMA-9s, and GDXJ even briefly broke out to a new cycle high prior to dropping into the close.  Miners seem to really enjoy the dollar's drop.  Both mining ETFs are forming ascending triangle formations, and the GDX:$GOLD ratio has risen above its EMA-9.  So far, so good.

SPX moved marginally higher, up +1.42 to 2039.68.  Volume has been declining as SPX has moved higher; some point soon SPX will get tired and it will correct.  That just hasn't happened yet.  VIX rose +0.25 to 12.92. 

TLT rose +0.07%, changing hardly at all.  JNK rose +0.20%, moving to the top of its recent trading range.  Bonds are more or less still chopping sideways, not giving us any clues as to their next direction.

The commodity index rose +0.99%, recovering all its losses from yesterday and closing just barely above its EMA-9.  Commodities are slowly moving higher - my guess is, if the dollar continues downhill the commodity complex should improve, which should help PM move higher too.  WTIC rose +0.35 to 77.53; Brent rose +0.30 to 82.39, after making a new cycle low earlier in the day.  Both oil contracts still remain below their respective EMA-9, and they are both still in a downtrend.  Oil continues to look weak.

The rally in the miners today along with the drop in the buck reinforces the case that 1130 will stand as a low for gold - perhaps not for all time, but at least for the near future.  Risks to this scenario is renewed strength in the buck.

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